L&T Commissions its first Supercritical Power Plant

Taking a lead amongst the private players, the engineering and construction giant L&T has commissioned India’s first indigenously manufactured power plant in supercritical category.

The country’s largest engineering and construction firm Larsen & Toubro (L&T’s) power arm L&T Power has commissioned its first unit of 2×700 MW supercritical thermal power plant of Nabha Power at Rajpura in Punjab. The plant is the largest unit of any indigenously manufactured power plant in the country.

The plant was constructed on a turnkey basis by L&T Power with more than 90% of the equipment sourced from the group companies of L&T. The supercritical boiler and turbine were manufactured by L&T’s joint venture companies with Mitsubishi Heavy Industries (MHI) located at Hazira, Gujarat.

The foundation stone of the green field project was laid by Chief Minister of Punjab Sardar Parkash Singh Badal in presence of L&T’s Group Executive Chairman, A M Naik on March 3, 2010. The plant went through ‘Light Up’ on December 5, 2013 and was dedicated to the state of Punjab by the Chief Minister in the presence of the Deputy Chief Minister Sardar Sukhbir Singh Badal and Shailendra Roy on December 8, 2013.

Cautious on domestic orders

Citing the economic slowdown and upcoming elections in India, the engineering and construction conglomerate L&T believes that these factors could impact the order inflows from the sector in the coming six-nine months. However, it is optimistic about order inflows from overseas, mainly from hydrocarbon sector. Taking in account these factors creating poor investment climate, the company has revised its order book growth target from 20% to 15% for the fiscal year ending March 2014.

“The general weakness of the macro-economic environment continues. Considering that the country is already in election mode, policy issues are still to be addressed in their entirety,” said Chief Financial Officer R Shankar Raman.

L&T, which posted a 12% rise in December quarter net profit, said new orders grew 21% to `21,722 crore, thanks primarily to international customers, which accounted for 38% of new business. Order inflows from overseas markets more than doubled, mainly due to a surge in demand in the Middle East, the company said, adding it was looking to boost its presence in select overseas markets.

During the quarter, the company reported a healthy order inflow of `21,722 crore, up 21.0% yoy. Infrastructure and Others segments were the major contributors to revenue with a share of 85% and 12% respectively. For Q3 FY14, about 38% of the orders came from the international market, owing to major orders secured in the Middle East region. As of Q3 FY14, L&T stands tall on an order backlog of `171,184 crore, indicating a growth of 13.0%. L&T’s order book is majorly dominated by the Infra (76%) and Power (9%) segments. Process (8%) and others (7%) constitute the remaining part of the order book.

Raising capacity utilization

L&T is hopeful of getting around two BTG orders this year, which will improve the company’s capacity utilization. More and more power utilities are realising the advantages of awarding orders on EPC basis, like in the case of Rajasthan Rajya Vidyut Utpadan Nigam Ltd.

L&T’s manufacturing facilities are primarily intended for domestic market. However, after adaptation of the MHI manufacturing technology and quality requirements, the company is also using its manufacturing facility for international orders. “We have received export orders from MHI. We also hope to bag contracts on standalone ESPs, HRSGs and critical piping, both in the domestic and international markets,” said MV Kotwal, whole-time director and president (heavy engineering).

According to him, last year demand and order booking was slow across the sector, however, it is gradually picking up. “We have developed capabilities but substantial growth in volumes has not really occurred yet. However, the signs are there in the latest procurement procedures that they (the government) are going to give greater role to entire private sector manufacturing, so signs of change are definitely there,” Kotwal added.